Robert and Diane, husband and wife, live in Pennsylvania, a common law state. They purchased land as joint tenants in 2014 for $300,000. In 2018, Diane dies and bequeaths her share of the land to Robert. The land has a fair market value of $450,000. What is Robert's adjusted basis for the land?

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At the time of purchase, the adjusted basis for both Robert and Diane would be $150,000 each (half of the $300,000 purchase price). When Diane dies, her half of the land is stepped up to its fair market value of $225,000 ($450,000 divided by two). Thus, Robert's new basis is $375,000 ($150,000 + $225,000).

Robert and Diane, Husband and Wife, Live in Pennsylvania, a Common